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Blogwatch

May 20, 2009
World governments hope stimulus packages will stick

From the $787 billion stimulus package in the U.S. to China’s $586 billion, world governments are hoping that they can lay the groundwork for economic recovery. Some analysts say the worst is over.

In Japan, the downward spiral is getting steeper, with exports falling and companies slashing production. In the first quarter of the year, Japan’s economy shrank more quickly than at any time in the past 50 years. The country has pumped $154 billion in stimulus into the economy. 

With unemployment now at 4.8 percent, Brazilians of Japanese descent who were welcomed just 10 years ago as guest workers are now being offered money to take a one way ticket and go home.

Blogger “Peter” in Japan visits a town populated mostly by Brazilians and describes the hardships there: 

My daughter recently asked me if I could drive her to the nearby town of Oizumi so she could visit a friend who lived there, and I was happy to do it. In my 18 years here I’d never been to the “Brazil in Japan,” famous for having the highest percentage of nikkei Brazilians and Peruvians in the country. […]

It was certainly interesting to drive down the street and see all the businesses sporting Brazilian flags, and walking into the all-Brazilian convenience store was a good excuse to buy some interesting chocolates and something called Inca Kola. The people of the town are largely dependent on factory jobs at companies like Sanyo, and times are very hard for them right now, prompting the Japanese government to take the unprecedented step of offering financial assistance to any guest worker who wants to go home but who is unable to for economic reasons.

From Germany, where there are signs that the worst may be over, an anonymous comment on a forum reflects the continued suffering of the country’s worst recession since World War II:

I was made redundant, I have several friends in Munich that have been made redundant, no point going home cause the situation is just as bad there. The industry that I worked in is in freefall with more job loses to come. It is absolutely unbelieveable and very scary. After a masters degree and several years of experience at very good companies, I have very little chance of finding a job. It’s like someone pressed the reset button on the economy. 

In Spain, where new statistics say the country’s economy actually contracted by nearly 2 percent in the first quarter of 2009, unemployment has reached 17 percent. Blogger Alex in Spain describes his experience:

Here in Spain, unemployment has reached an all-time high. Back in March my part-time job had to cut out my English as a Second Language class because the government severely cut back on funding to adult education. Then yesterday was my partner’s last day at his job and he is now on the unemployment line.

In Africa, economies have been growing at a rate of six percent a year since 2000. But the head of the International Monetary Fund warned on Wednesday that growth on that continent will be only 1.5 percent this year.  He called Africa “an innocent victim” of the recession and asked international donors to keep their aid commitments to Africa in the coming year.

Blogger “MrK” of “Zambian Economist” argues that aid is less important than economic reform: 

What is needed is fargoing nationalisation of industries. Reinvest profits from raw materials in other economic sectors, and the economies will grow. There really is a need for economic diversification, and using the mines is the way to do it. 

Economic reform, government reform, land reform, not more ‘aid’.

From Bahrain, blogger “Mahmood” describes how consumers have reacted to high vehicle prices:

There is an active campaign in Bahrain at the moment by consumers to force greedy car dealerships to reduce their prices. It’s apparently fashioned after a Saudi campaign which some say already bore fruit.

The essence of this campaign is to not buy cars, let the stock rust if need be, until dealers take active steps to make car prices in Bahrain comparable to world markets. 

Barbados is suffering from decreased tourism and mounting government debt. A blogger at the “Living in Barbados” blog reacts to the new budget announced by Prime Minister David Thompson:

I remember when I first got here most of the criticism I heard from Mr. Thompson, when in opposition, was that the economic ills, especially rising prices, could be put at the door of the government of Mr. Owen Arthur. Now that the hat has a new wearer he is quick to point out he was having to deal with ‘circumstances not of our making’, and much blame is laid on the world recession. I don’t have a problem with that observation, but I wonder what changed in the shifting of positions.

Much of the success in economic policy is about confidence and credibility. Barbados needs foreigners’ money and it comes in three main forms–from tourists, from those setting up and operating international businesses here, and from investors in real estate on the island. My own view is that the government did not see that nothing should be done to jeopardise any of those pillars especially in the current fragile economic conditions. People are fickle when it comes to putting their money to work abroad. Tough economic conditions in the UK, Canada and the US will crimp tourists arrivals and spending. Plans by the world’s economic ‘big boys’ to rein in what they call ‘tax havens’ have had Barbados and other countries with relatively low taxes scrambling to paint themselves as less harmful. But, I think the ball was missed in making foreign property investors less welcome, and I fear that once they turn their backs it will be hard to get them to change their minds.

Photo courtesy of Flickr user glennharper under a Creative Commons license.

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Comments

2 comments

#2

Quoting an article in Newsweek (May 25th) by Christopher Dickey:
“Slow and steady may win the race in fables, but that’s not always how it works in the economy. Since 1992, the United States has grown at a speedy 3 %; France and Germany have plotted forward at about 1.7% a year. But as the world’s economies slog towards recovery, Europe’s tortoises look as if they just might hit the finish line first.

Pricey social safeguards-universal health care, unemployment benefits- help explain the difference, but attitudes toward government spending are also key. While Americans view state spending as a waste, Europeans understand that governments spend money to secure assets. That includes bridges and nuclear reactors, but also hard-to-price, intangible assets like a well-educated and healthy population. French President Nicolas Sarkozy has gone so far as to ask economist Joseph Stiglitz to look at ways to include intangible assets in measures of properity such as GDP.

Wefare programs have helped European countries continue spending US retail fell nearly 10% in the year ending March 2009, but just 3.9% in France. As the economist Anton Brender wrote, “the income of a jobless French person is very much higher thaqn most of the workers in the world!” Hares on the other hand, don’t collect generous unemployment benefits.
My comment: It’s time the Republican Party took it’s selfish, self-serving agenda far away and never appear again. If we seem to be heading towards a form of socialism so be it. It’s a hell of a lot better than what we have now!

#1

Dear Sir or Madam:

The analysts who say the worst is over in my opinion are expressing a sign of our times. There is an unrealistic sense of optimism in the markets today. The economic problems that we face have been created over a period of years and it will take at least that long in all likelihood to get ourselves out. There is no quick fix unfortunately.

The spending programs that the United States is implementing are largely ‘infrastructure’ focused and it will take years to see the benefits.

Also, American consumers comprise approximately 70% of the economy. As the employment market continues to contract consumer spending will not be at the levels needed to sustain a real economic recovery in our country and by extension in China where its economy is largely driven by exports.

The credit markets are still in a fragile state and in my opinion credit availability will continue to be difficult to come by and will not be at the levels that Americans are accustomed to in recent years.

We are seeing a ‘Seismic-Shift’ in the world economy today. Things will be very different in the years to come.

Sincerely,
Alberto Suarez

http://www.seismic-shifts.com/
http://seismic-shifts.ning.com/
http://twitter.com/SeismicShifts

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